The NAIC To Establish Cannabis Insurance Working Group

The National Association of Insurance Commissioners (NAIC) will establish a Cannabis Insurance Working Group to address the issue of insurance availability for the legalized cannabis industry. The group will be chaired by California Insurance Commissioner Dave Jones.

At the NAIC's Summer National Meeting, Commissioner Jones proposed that the NAIC establish this working group to enable state insurance regulators to better understand where insurance coverage gaps exist for the legalized cannabis industry and to share and develop best practices for state insurance regulators to follow when addressing coverage gaps and cannabis insurance regulatory issues. The Cannabis Insurance Working Group will enable regulators to better understand the legalized cannabis industry and its insurance needs and the role insurance regulators can play in helping to address insurance needs.

"Cannabis businesses face insurance availability and insurance coverage gaps—which means that those who shop, those who work in, those who sell goods or services to, or those who own, invest in, or operate cannabis businesses may not have access to insurance to help them recover if there are accidents, injuries, property damage, or any of the things insurance typically covers," said Mr. Jones. "As state insurance regulators, one of our responsibilities is to understand new legal businesses and their insurance needs and then work to encourage the availability of insurance to meet these new risks and coverage needs.

The newly created NAIC Cannabis Insurance Working Group will consider the insurance regulatory issues surrounding the legalized cannabis business from seed to sale, including availability and scope of coverage, workers compensation issues, and consumer information and protection. The working group will also develop a white paper outlining the issues and make recommendations for the development of regulatory guidance as appropriate.

Recently, the California Insurance Department approved three more insurers to offer coverage for the cannabis industry in California. The North River Insurance Company and United States Fire Insurance Company began offering coverage August 2, and White Pine Insurance Company will begin offering coverage later this month. All three insurers will write surety bonds for the cannabis businesses.